Cogent Communications (CCOI) 10-Q 6 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 31, 2015
Document and Entity Information
Entity Registrant Name	COGENT COMMUNICATIONS HOLDINGS, INC.
Entity Central Index Key	1,158,324
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		45,598,018
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 224,494	$ 287,790
Accounts receivable, net of allowance for doubtful accounts of $1,872 and $1,707, respectively	30,972	33,089
Prepaid expenses and other current assets	21,061	18,762
Total current assets	276,527	339,641
Property and equipment, net	347,550	360,761
Deferred tax assets - noncurrent	47,448	48,963
Deposits and other assets - $381 and $389 restricted, respectively	10,863	12,410
Total assets	682,388	761,775
Current liabilities:
Accounts payable	15,489	13,287
Accrued and other current liabilities	40,913	32,151
Current maturities, capital lease obligations	8,187	14,594
Total current liabilities	64,589	60,032
Senior secured notes including premium of $4,230		244,230
Senior secured notes	250,000
Senior unsecured notes	200,000	200,000
Capital lease obligations, net of current maturities	120,485	151,944
Other long term liabilities	25,125	21,775
Total liabilities	$ 660,199	$ 677,981
Commitments and contingencies:
Stockholders' equity:
Common stock, $0.001 par value; 75,000,000 shares authorized; 45,631,978 and 46,398,729 shares issued and outstanding, respectively	$ 46	$ 46
Additional paid-in capital	440,401	460,576
Accumulated other comprehensive income-foreign currency translation	(12,175)	(6,462)
Accumulated deficit	(406,083)	(370,366)
Total stockholders' equity	22,189	83,794
Total liabilities and stockholders' equity	$ 682,388	$ 761,775

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 1,872	$ 1,707
Deposits and other assets, restricted (in dollars)	$ 381	389
Senior secured notes, premium (in dollars)		$ 4,230
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	45,631,978	46,398,729
Common stock, shares outstanding	45,631,978	46,398,729

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Service revenue	$ 98,799	$ 94,623	$ 196,041	$ 187,560
Operating expenses:
Network operations (including $160 and $114 and $332 and $227 of equity-based compensation expense for three months and six months ended June 30, 2015 and 2014, respectively, exclusive of depreciation and amortization shown separately below)	42,412	39,605	83,491	78,442
Selling, general, and administrative (including $2,938 and $1,759 and $5,908 and $3,651 of equity-based compensation expense, for three and six months ended June 30, 2015 and 2014, respectively)	28,925	26,139	58,603	52,423
Depreciation and amortization	17,371	17,301	34,883	34,505
Total operating expenses	88,708	83,045	176,977	165,370
Gain on capital lease termination			10,110
Gains on equipment transactions	719	2,731	2,268	5,026
Loss on debt extinguishment and redemption			(10,144)
Operating income	10,810	14,309	21,298	27,216
Interest income and other, net	417	268	516	404
Interest expense	(9,692)	(13,790)	(21,000)	(25,092)
Income before income taxes	1,535	787	814	2,528
Income tax (provision) benefit	(695)	421	(1,558)	(1,195)
Net (loss) income	840	1,208	(744)	1,333
Comprehensive (loss) income:
Net (loss) income	840	1,208	(744)	1,333
Foreign currency translation adjustment	1,683	(44)	(5,713)	(506)
Comprehensive (loss) income	$ 2,523	$ 1,164	$ (6,457)	$ 827
Net (loss) income per common share:
Basic and diluted net (loss) income per common share (in dollars per share)	$ 0.02	$ 0.03	$ (0.02)	$ 0.03
Dividends declared per common share (in dollars per share)	$ 0.42	$ 0.17	$ 0.77	$ 0.56
Weighted-average common shares - basic (in shares)	44,774,831	45,897,449	45,012,441	46,200,844
Weighted-average common shares - diluted (in shares)	45,054,507	46,294,966	45,012,441	46,648,415

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Network operations, equity-based compensation expense	$ 160	$ 114	$ 332	$ 227
Selling, general, and administrative, equity-based compensation expense	$ 2,938	$ 1,759	$ 5,908	$ 3,651

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net (loss) income	$ (744)	$ 1,333
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	34,883	34,505
Amortization of debt discount and premium	(127)	2,555
Equity-based compensation expense (net of amounts capitalized)	6,240	3,878
Loss on debt extinguishment and redemption	10,144
Gain on capital lease termination	(10,110)
(Gains) losses - equipment transactions and other, net	(1,837)	(4,959)
Deferred income taxes	1,475	772
Changes in operating assets and liabilities:
Accounts receivable, net	1,126	(2,970)
Prepaid expenses and other current assets	(3,124)	(3,678)
Accounts payable, accrued liabilities and other long-term liabilities	689	7,822
Deposits and other assets	(208)	(227)
Net cash provided by operating activities	38,407	39,031
Cash flows from investing activities:
Purchases of property and equipment	(23,782)	(31,608)
Proceeds from dispositions of assets	82	92
Net cash used in investing activities	(23,700)	(31,516)
Cash flows from financing activities:
Dividends paid	(34,973)	(26,234)
Purchases of common stock	(27,225)	(32,084)
Repayment of convertible senior notes		(91,978)
Net proceeds from issuance of senior unsecured notes		195,824
Net proceeds from issuance of senior secured notes	248,599
Redemption of senior secured notes	(251,280)
Proceeds from exercises of stock options	219	301
Principal payments of capital lease obligations	(10,982)	(8,146)
Net cash (used in) provided by financing activities	(75,642)	37,683
Effect of exchange rates changes on cash	(2,361)	(229)
Net (decrease) increase in cash and cash equivalents	(63,296)	44,969
Cash and cash equivalents, beginning of period	287,790	304,866
Cash and cash equivalents, end of period	224,494	349,835
Supplemental disclosure of non-cash financing activities:
Non-cash component of network equipment obtained in exchange transactions	4,594	4,900
PP&E obtained for note payable	5,597
Capital lease obligations incurred	$ 7,683	$ 7,671

Description of the business and

Description of the business and recent developments:	6 Months Ended
	Jun. 30, 2015
Description of the business and recent developments:
Description of the business and recent developments:	1. Description of the business and recent developments: Reorganization and merger On May 15, 2014, pursuant to the Agreement and Plan of Reorganization (the “Merger Agreement”) by and among Cogent Communications Group, Inc. (“Group”), a Delaware corporation, Cogent Communications Holdings, Inc., a Delaware corporation (“Holdings”) and Cogent Communications Merger Sub, Inc., a Delaware corporation (“Merger Sub”), Group adopted a new holding company organizational structure whereby Group is now a wholly owned subsidiary of Holdings. Holdings is a “successor issuer” to Group pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In connection with the succession, the common stock of Holdings is deemed to be registered under Section 12(b) of the Exchange Act by operation of law. References to the “Company” for events that occurred prior to May 15, 2014 refer to Cogent Communications Group, Inc. and its subsidiaries and on and after May 15, 2014 the “Company” refers to Cogent Communications Holdings, Inc. and its subsidiaries. Description of business The Company is a Delaware corporation and is headquartered in Washington, DC. The Company is a facilities-based provider of low-cost, high-speed Internet access and Internet Protocol (“IP”) communications services. The Company’s network is specifically designed and optimized to transmit data using IP. The Company delivers its services primarily to small and medium-sized businesses, communications service providers and other bandwidth-intensive organizations in North America, Europe and Japan. The Company offers on-net Internet access services exclusively through its own facilities, which run from its network to its customers’ premises. The Company is not dependent on local telephone companies to serve its customers for its on-net Internet access services because of its integrated network architecture. The Company offers its on-net services to customers located in buildings that are physically connected to its network. The Company’s on-net service consists of high-speed Internet access and IP connectivity ranging from 100 Megabits per second to 100 Gigabits per second of bandwidth. The Company provides its on-net Internet access services to its net-centric and corporate customers. The Company’s net-centric customers include bandwidth-intensive users such as universities, other Internet service providers, telephone companies, cable television companies, web hosting companies, content delivery network companies and commercial content and application service providers. These net-centric customers obtain the Company’s services in colocation facilities and in the Company’s data centers. The Company operates data centers throughout North America and Europe that allow its customers to collocate their equipment and access the Company’s network. The Company’s corporate customers are located in multi-tenant office buildings and typically include law firms, financial services firms, advertising and marketing firms and other professional services businesses. In addition to providing its on-net services, the Company provides Internet connectivity to customers that are not located in buildings directly connected to its network. The Company provides this off-net service primarily to corporate customers in North America using other carriers’ facilities to provide the “last mile” portion of the link from the customers’ premises to the Company’s network. The Company also provides certain non-core services that resulted from acquisitions. The Company continues to support but does not actively sell these non-core services. Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments that the Company considers necessary for the fair presentation of its results of operations and cash flows for the interim periods covered, and of the financial position of the Company at the date of the interim condensed consolidated balance sheet. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. While the Company believes that the disclosures are adequate to not make the information misleading, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in its 2014 annual report on Form 10-K. The accompanying unaudited consolidated financial statements include all wholly-owned subsidiaries. All inter-company accounts and activity have been eliminated. Use of estimates The preparation of consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. Financial instruments At June 30, 2015, the carrying amount of cash and cash equivalents, accounts receivable, prepaid and other current assets, accounts payable and accrued expenses approximated fair value because of the short-term nature of these instruments. The Company measures its cash equivalents at amortized cost, which approximates fair value based upon quoted market prices (Level 1). Based upon recent trading prices (Level 2 — market approach) at June 30, 2015 the fair value of the Company’s $200.0 million senior unsecured notes was $190.8 million and the fair value of the Company’s $250.0 million senior secured notes was $247.5 million. The Company was party to letters of credit totaling $0.4 million as of June 30, 2015. These letters of credit are secured by investments that are restricted and included in other assets. Basic and diluted net income (loss) per common share Basic earnings per share (“EPS”) excludes dilution for common stock equivalents and is computed by dividing net income or (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding during each period, adjusted for the effect of dilutive common stock equivalents. Shares of restricted stock are included in the computation of basic EPS as they vest and are included in diluted EPS, to the extent they are dilutive, determined using the treasury stock method. As of June 30, 2015 and 2014, 1.1 million and 0.8 million unvested shares of restricted common stock, respectively, are not included in the computation of basic income per share, as these shares were not vested. Using the “if-converted” method, the shares issuable upon conversion of the Company’s convertible senior notes (the “Convertible Notes”) were anti-dilutive for the three months ended June 30, 2014. Accordingly, that impact has been excluded from the computation of diluted loss per share. The Convertible Notes were repaid in June 2014 and are no longer outstanding. Anti-dilutive stock options and restricted shares excluded from diluted weighted average shares were 120,553 and 369,243 as of June 30, 2015 and 46,226 and 1,200 as of June 30, 2014, respectively. For the three and six months ended June 30, 2015 and 2014, the Company’s employees exercised options for 6,165, 12,624, 15,278 and 25,035 common shares, respectively. The following details the determination of diluted weighted average shares: Three Months Ended June 30, 2015 Three Months Ended June 30, 2014 Six Months Ended June 30, 2014 Weighted average common shares - basic Dilutive effect of stock options Dilutive effect of restricted stock Weighted average common shares - diluted Recent Accounting Pronouncements On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company beginning on January 1, 2018. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest — Simplifying the Presentation of Debt Issuance Costs . The ASU will require debt issuance costs to be presented as a deduction from the corresponding debt liability making the presentation of debt costs consistent with the presentation of debt discounts or premiums. The new standard is effective for the Company on January 1, 2016 and the ASU must be applied retrospectively to all prior periods.

Property and equipment_

Property and equipment:	6 Months Ended
	Jun. 30, 2015
Property and equipment:
Property and equipment:	2. Property and equipment: Depreciation and amortization expense related to property and equipment and capital leases was $17.4 million $34.8 million, $17.3 million and $34.5 million for the three and six months ended June 30, 2015 and 2014, respectively. The Company capitalized salaries and related benefits of employees working directly on the construction and build-out of its network of $2.1 million, $4.3 million, $1.9 million and $3.9 million for the three and six months ended June 30, 2015 and 2014, respectively. Exchange agreement In the three and six months ended June 30, 2015 and 2014, the Company exchanged certain used network equipment for new network equipment and cash consideration. The fair value of the equipment received was estimated to be $1.7 million, $8.3 million, $5.6 million and $10.3 million, respectively, and resulted in gains of $0.7 million, $2.3 million, $2.7 million and $4.9 million, respectively. The estimated fair value of the equipment received was based upon the cash consideration price the Company pays for the new network equipment on a standalone basis (Level 3). Purchase and installment payment agreements In January 2015, the Company entered into a purchase agreement with a vendor. Under the purchase agreement the Company is required to purchase a total of $28.9 million of network equipment during the eighteen month term. As of June 30, 2015, the Company was required to make an additional $19.5 million of purchases under the purchase agreement. In March 2015, the Company entered into an installment payment agreement (“IPA”) with this vendor. Under the IPA the Company may purchase up to $25.0 million of network equipment through July 2015 in exchange for interest free note obligations each with a twenty-four month term. There are no payments under each note obligation for the first six months followed by eighteen equal installment payments for the remaining eighteen month term. As of June 30, 2015, the Company had entered into $5.6 million of note obligations under the IPA. The Company recorded the net present value of the note obligation utilizing an imputed interest rate. The resulting discount totaling $0.3 million as of June 30, 2015, under the note obligations is being amortized over the note term using the effective interest rate method. Gain on capital lease termination In March 2015 the Company elected to terminate certain IRU capital lease obligations in Spain with a vendor. The Company obtained alternative fiber to serve its customers in Spain. Under its estimate of the termination provisions of the related contracts the Company has recorded an estimated termination liability of $8.1 million included in accrued and other current liabilities. The difference between the remaining carrying amount of the related IRU capital lease ($29.9 million), liabilities the remaining net book value of the IRU assets ($10.0 million) and the termination liability and amounts due through the termination date has been recorded as a gain on capital lease termination of $10.1 million.

Long-term debt_

Long-term debt:	6 Months Ended
	Jun. 30, 2015
Long-term debt:
Long-term debt:	3. Long-term debt: Debt extinguishment, redemption and new debt issuance- $250.0 million In March 2015, Group redeemed its $240.0 million 8.375% senior notes due in 2018 (the “2018 Notes”) with the proceeds from its February 2015 issuance of $250.0 million of 5.375% senior secured notes (the “2022 Notes”) and existing cash on hand. In February 2015 the Company deposited $251.6 million with the trustee for the benefit of the holders of the 2018 Notes in order to redeem on March 12, 2015 the entire outstanding amount of 2018 Notes at a redemption price of 104.188% of the $240.0 million principal amount thereof plus accrued interest. As a result of this transaction the Company incurred a loss on debt extinguishment and redemption of $10.1 million. The 2022 Notes were sold in private offerings for resale to qualified institutional buyers pursuant to SEC Rule 144A and mature on March 1, 2022. Interest accrues at 5.375% beginning on February 20, 2015 and is paid semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2015. The net proceeds from the offering were $248.6 million after deducting discounts and commissions and offering expenses. Issuance costs are included in deposits and other assets. The net proceeds from the offering are intended to be used for general corporate purposes. The indenture governing the 2022 Notes provides that the Company and each of the Company’s existing domestic subsidiaries and future material domestic subsidiaries guarantee the 2022 Notes, subject to certain exceptions and permitted liens. The 2022 Notes are also secured by a pledge of all of the equity interests in Group’s domestic subsidiaries and 65% of the equity interests in Group’s first-tier foreign subsidiaries. The 2022 Notes and the subsidiary guarantees will be the Company’s and the subsidiary guarantors’ senior indebtedness and will rank pari passu in right of payment with all of the Company’s and the subsidiary guarantors’ existing and future senior indebtedness, effectively senior to Group’s senior unsecured indebtedness to the extent of the value of the collateral securing the 2022 Notes and the subsidiary guarantees, including Group’s $200.0 million 2021 Notes that were issued on April 9, 2014 and senior to any of the Company’s and the subsidiary guarantors’ future subordinated indebtedness. The 2022 Notes are structurally subordinated to the liabilities of the non-guarantor subsidiaries and are effectively subordinated to the Company’s and the subsidiary guarantors’ secured indebtedness to the extent of the value of the collateral securing such indebtedness on a basis senior to the 2022 Notes and the subsidiary guarantees. Holdings is also a guarantor of the 2022 Notes; however Holdings’s guarantee is unsecured and thus its guarantee is not secured by any of the Holdings assets. Holdings is also not subject to the covenants under the indenture governing the 2022 Notes. The 2022 Notes may be redeemed prior to December 1, 2021 (three months prior to the maturity date of the Notes) in whole or from time to time in part, at a redemption price equal to the sum of (1) 100% of the principal amount plus accrued and unpaid interest, if any, to, but not including, the redemption date, and (2) a make-whole premium, if any. The make-whole premium is the excess of (1) the net present value, on the redemption date, of the principal being redeemed or paid and the amount of interest (exclusive of interest accrued to the date of redemption) that would have been payable if such redemption had not been made, over (2) the aggregate principal amount of the notes being redeemed or paid. Net present value shall be determined by discounting, on a semi-annual basis, such principal and interest at the reinvestment rate (as determined in the indenture governing the 2022 Notes) from the respective dates on which such principal and interest would have been payable if such redemption had not been made. In addition, at any time on or after December 1, 2021 (three months prior to the maturity date of the Notes), the Issuer may redeem the 2022 Notes, in whole and or in part, at a redemption price equal to 100% of the principal amount of the 2022 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date. The indenture governing the 2022 Notes, among other things, limits the Company’s ability to incur indebtedness; to pay dividends or make other distributions; to make certain investments and other restricted payments; to create liens; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; to incur restrictions on the ability of a subsidiary to pay dividends or make other payments; and to enter into certain transactions with its affiliates. Limitations on the ability to incur additional indebtedness (excluding IRU agreements incurred in the normal course of business) include a restriction on incurring additional indebtedness if the Company’s consolidated leverage ratio, as defined in the Indenture is greater than 5.0. Permitted investments and payments that are not restricted total $56.7 million as of June 30, 2015 plus Holdings permitted investments of $30.8 million as of June 30, 2015 which are not subject to these limitations for a total permitted investment amount of $87.5 million as of June 30, 2015. This amount may be increased by the Company’s consolidated cash flow, as defined in the Indenture as long as the Company’s consolidated leverage ratio is less than 4.25. Senior unsecured notes- $200.0 million On April 9, 2014, Cogent Communications Finance, Inc. ( “Cogent Finance”), a newly formed financing subsidiary of Group, completed an offering of $200.0 million in aggregate principal amount at par of 5.625% Senior Notes due 2021 (the “2021 Notes”). The 2021 Notes were sold in private offerings for resale to qualified institutional buyers pursuant to SEC Rule 144A. The offering closed into escrow pursuant to an escrow agreement, dated as of April 9, 2014 (the “Escrow Agreement”). The term “Issuer” refers to Cogent Finance prior to the release of the funds from the escrow account (such date of release, the “Escrow Release Date”) and to Group after the Escrow Release Date. As a condition to releasing the funds from escrow the Company redeemed its remaining outstanding Convertible Notes on June 20, 2014 (the “Redemption Transaction”). After consummation of the Redemption Transaction, Cogent Finance merged with Group, with Group continuing as the surviving corporation (the “Finance Merger”). At the time of consummation of the Finance Merger, Group assumed the obligations of Cogent Finance under the 2021 Notes and the indenture governing the 2021 Notes (the “Indenture”) and Group and each of Group’s domestic subsidiaries became party to the Indenture pursuant to a supplemental indenture to the Indenture and the obligations under the Indenture became obligations solely of Group and each of Group’s domestic subsidiaries. Holdings also provided a guarantee of the 2021 Notes but Holdings is not subject to any of the covenants under the Indenture. After the conditions to the release of the escrow proceeds were satisfied, on June 25, 2014 (the “Escrow Release Date”) the proceeds from the 2021 Notes were released. The net proceeds from the offering were $195.8 million after deducting discounts and commissions and offering expenses. Issuance costs are included in deposits and other assets. The net proceeds from the offering are intended to be used for general corporate purposes. The 2021 Notes were issued pursuant to, and are governed by the Indenture between Cogent Finance and the trustee. The 2021 Notes bear interest at a rate of 5.625% per year and mature on April 15, 2021. Interest began to accrue on the 2021 Notes on April 9, 2014 and is paid semi-annually on April 15 and October 15, commencing on October 15, 2014. Following the Escrow Release Date, the 2021 Notes became Group’s senior unsecured obligations and are guaranteed on a senior unsecured basis by the Company. The 2021 Notes are effectively subordinated in right of payment to all of Group’s and each guarantor’s secured indebtedness and future secured indebtedness, if any, to the extent of the value of the assets securing such indebtedness. The 2021 Notes are equal in right of payment with Group’s and each guarantor’s unsecured indebtedness that is not subordinated in right of payment to the 2021 Notes. The 2021 Notes rank senior in right of payment to Group’s and each guarantor’s future subordinated debt, if any; and are structurally subordinated in right of payment to all indebtedness and other liabilities of any of the Group’s subsidiaries that are not guarantors, which consists of immaterial subsidiaries and foreign subsidiaries that do not guarantee other indebtedness of Group. The Company may redeem the 2021 Notes, in whole or in part, at any time prior to April 15, 2017 at a price equal to 100% of the principal amount plus an “applicable” premium, plus accrued and unpaid interest, if any, to the date of redemption. The “applicable” premium means, with respect to a note at any date of redemption, the greater of (i) 1.0% of the then-outstanding principal amount of such note and (ii) the excess of (A) the present value at such date of redemption of (1) the redemption price of 104.219% plus (2) all remaining required interest payments due on such note through April 15, 2017 (excluding accrued but unpaid interest to the date of redemption), computed using a discount rate equal to the Treasury Rate as of such date of redemption plus 50 basis points, over (B) the then-outstanding principal amount of such note. The Company may also redeem the 2021 Notes, in whole or in part, at any time on or after April 15, 2017 at the applicable redemption prices specified under the indenture governing the 2021 Notes plus accrued and unpaid interest, if any, to the date of redemption. The redemption prices (expressed as a percentage of the principal amount) are 104.219% during the 12-month period beginning on April 15, 2017, 102.813% during the 12-month period beginning on April 15, 2018, 101.406% during the 12-month period beginning on April 15, 2019 and 100.0% during the 12-month period beginning on April 15, 2020 and thereafter. In addition, the Company may redeem up to 35% of the 2021 Notes before April 15, 2017 with the net cash proceeds from certain equity offerings at a redemption price of 105.625% of the principal amount plus accrued and unpaid interest. If the Company experiences specific kinds of changes of control, the Company must offer to repurchase all of the 2021 Notes at a purchase price of 101.0% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date. The indenture governing the 2021 Notes, among other things, limits the Company’s ability to incur indebtedness; to pay dividends or make other distributions; to make certain investments and other restricted payments; to create liens; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; to incur restrictions on the ability of a subsidiary to pay dividends or make other payments; and to enter into certain transactions with its affiliates. Limitations on the ability to incur additional indebtedness (excluding IRU agreements incurred in the normal course of business) include a restriction on incurring additional indebtedness if the Company’s consolidated leverage ratio, as defined in the Indenture is greater than 5.0. Permitted investments and payments that are not restricted total $56.7 million as of June 30, 2015 plus Holdings permitted investments of $30.8 million as of June 30, 2015 which are not subject to these limitations for a total permitted investment amount of $87.5 million as of June 30, 2015. This amount may be increased by the Company’s consolidated cash flow, as defined in the Indenture as long as the Company’s consolidated leverage ratio is less than 4.25. Senior secured notes- $240.0 million On January 26, 2011 and on August 19, 2013, the Company issued its 8.375% 2018 Notes for aggregate principal amounts of $175.0 million and $65.0 million, respectively, in private offerings for resale to qualified institutional buyers pursuant to SEC Rule 144A. The 2018 Notes were secured and bore interest at 8.375% per annum. Interest was payable in cash semiannually in arrears on February 15 and August 15, of each year. On January 26, 2011, the Company received net proceeds of $170.5 million after deducting $4.5 million of issuance costs from issuing $175.0 million of its 2018 Notes. On August 19, 2013, the Company received net proceeds of approximately $69.9 million after deducting $1.0 million of issuance costs from issuing $65.0 million of 2018 Notes. The 2018 Notes sold in August 2013 were sold at 109.00% of par value. The resulting $5.9 million premium was being amortized as a reduction to interest expense to the maturity date using the effective interest rate method. In March 2015, the 2018 Notes were extinguished and redeemed with the proceeds of the Company’s issuance of its $250.0 million of 2022 Notes and cash on hand. Convertible senior notes In June 2007, the Company issued its Convertible Notes for an aggregate principal amount of $200.0 million in a private offering for resale to qualified institutional buyers pursuant to SEC Rule 144A. The Convertible Notes were scheduled to mature on June 15, 2027, were unsecured, and bore interest at 1.00% per annum. Interest was payable in cash semiannually in arrears on June 15 and December 15, of each year, beginning on December 15, 2007. The Company received net proceeds from the issuance of the Convertible Notes of approximately $195.1 million, after deducting the original issue discount of 2.25% and issuance costs. The discount and other issuance costs were being amortized to interest expense using the effective interest method through June 15, 2014, which was the earliest put date. In 2008, the Company purchased an aggregate of $108.0 million of face value of the Convertible Notes for $48.6 million in cash in a series of transactions resulting in $92.0 million of principal amount of the Convertible Notes remaining after these purchase transactions. Holders of the Convertible Notes had the right to require the Company to repurchase for cash all or some of their notes on June 15, 2014, 2017 and 2022 at a redemption price of 100% of the principal amount plus accrued interest. Holders of $58.5 million of principal amount of the Convertible Notes issued a repurchase notice to the Company and on June 16, 2014 the Company repaid $58.5 million of Convertible Notes principal amount plus accrued interest. The Convertible Notes may have been redeemed by the Company at any time on and after June 20, 2014 at a redemption price of 100% of the principal amount plus accrued interest. On June 20, 2014 the Company redeemed the remaining $33.5 million principal amount of the Convertible Notes. The asmount of interest expense recognized and effective interest rates for the Convertible Notes were as follows (in thousands): Three Months Ended June 30, 2014 Six Months Ended June 30, 2014 Contractual coupon interest $ $ Amortization of discount and costs on Notes Interest expense $ $ Effective interest rate % %

Commitments and contingencies_

Commitments and contingencies:	6 Months Ended
	Jun. 30, 2015
Commitments and contingencies:
Commitments and contingencies:	4. Commitments and contingencies : Current and potential litigation In accordance with the accounting guidance for contingencies, the Company accrues its estimate of a contingent liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Where it is probable that a liability has been incurred and there is a range of expected loss for which no amount in the range is more likely than any other amount, the Company accrues at the low end of the range. The Company reviews its accruals at least quarterly and adjusts them to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. The Company has taken certain positions related to its obligations for leased circuit and dark fiber obligations for which it is reasonably possible could result in a loss of up to $2.3 million in excess of the amount accrued at June 30, 2015. On March 27, 2015 the City of Sunrise Firefighters Retirement Fund (“Plaintiff”) filed suit against the Company in the Court of Chancery of the State of Delaware alleging that certain bylaw amendments regarding litigation had been adopted by the board in violation of Delaware law. On March 30, the Company rescinded the amendments to the bylaws and withdrew from the proxy a request that the stockholders give an advisory vote on the amendments. On April 1, the Company filed a supplement to the proxy, which acknowledged that the Company’s certificate of incorporation does not give the Company’s board of directors the power to amend the bylaws of the Company and that the provision of the bylaws that purports to give the board of directors such authority is not enforceable absent a grant of such authority in the certificate of incorporation. The board of directors agreed that it will not seek to adopt, amend or repeal any bylaws other than by a vote of stockholders, unless such power is conferred on the board of directors through an amendment to the Company’s certificate of incorporation. The Company and Plaintiff entered into a Memorandum of Understanding to settle the lawsuit, subject to Court approval. Pursuant to the proposed settlement, the Company agreed that the lawsuit was the sole cause of the Company’s above-referenced March 30 and April 1 disclosures. In exchange, Plaintiff will consent to dismissal of this case with prejudice and the parties will exchange mutual releases. On July 30, 2015 the court accepted the settlement agreement and awarded the plaintiffs’ attorneys fees. Certain former sales employees of the Company filed a collective action against the Company in December 2011 in the United States District Court, Southern District of Texas, Houston Division alleging misclassification of the Company’s sales employees throughout the United States in violation of the Fair Labor Standards Act. The lawsuit sought to recover pay for allegedly unpaid overtime and other damages, including attorney’s fees. In March 2014, the judge de-certified the collective action. Each of the former employees that opted-in to the collective action retained the right to file an individual action. Approximately 70 former employees did so. The Company has settled a number of the cases that were filed and made the required settlement payments. Currently, only the case in California remains. In it the plaintiffs seek certification of a class or collective action related to the employees in California. The Company denies the claims and believes that the claims for unpaid overtime are without merit. The Company believes its classification of sales employees is in compliance with applicable law. In the normal course of business the Company is involved in other legal activities and claims. Because such matters are subject to many uncertainties and the outcomes are not predictable with assurance, the liability related to these legal actions and claims cannot be determined with certainty. Management does not believe that such claims and actions will have a material impact on the Company’s financial condition or results of operations. Judgment is required in estimating the ultimate outcome of any dispute resolution process, as well as any other amounts that may be incurred to conclude the negotiations or settle any litigation. Actual results may differ from these estimates under different assumptions or conditions and such differences could be material.

Income taxes_

Income taxes:	6 Months Ended
	Jun. 30, 2015
Income taxes:
Income taxes:	5. Income taxes: The effective income tax rates for the three and six months ended June 30, 2015 and 2014 are different from the U.S. federal income tax statutory rate of 35.0% primarily due to the impact of discrete expenses, permanent differences resulting from non-deductible equity-based compensation expense and from the impact of state taxes and foreign losses that have not met the criteria for recording as an income tax benefit. The components of income (loss) before income taxes consist of the following (in thousands): Three Months Ended June 30, 2015 Three Months Ended June 30, 2014 Six Months Ended June 30, 2015 Six Months Ended June 30, 2014 Domestic $ $ $ $ Foreign ) ) ) ) Total $ $ $ $

Common stock buyback program_

Common stock buyback program:	6 Months Ended
	Jun. 30, 2015
Common stock buyback program:
Common stock buyback program:	6. Common stock buyback program: The Company’s board of directors has approved purchases of the Company’s common stock under a buyback program (the “Buyback Program”) . On August 5, 2015 the Company’s board of directors approved an additional $50.0 million under the Buyback Program and extended the program through December 31, 2016. At June 30, 2015, there was approximately $10.0 million remaining for purchases under the Buyback Program. During the three and six months ended June 30, 2015 and 2014, the Company purchased 0.6 million, 0.8 million, 0.5 million and 0.9 million shares of its common stock for $19.1 million, $27.2 million, $17.9 million and $32.1 million, respectively.

Dividends on common stock_

Dividends on common stock:	6 Months Ended
	Jun. 30, 2015
Dividends on common stock:
Dividends on common stock:	7. Dividends on common stock: Dividends are recorded as a reduction to retained earnings. Dividends on unvested restricted shares of common stock are paid as the awards vest. The Company’s initial quarterly dividend payment was made in the third quarter of 2012. In addition to the Company’s regular quarterly dividends, in 2013, the Company’s board of directors approved an additional return of capital program (the “Capital Program”). Under the Capital Program the Company plans on returning additional capital to the Company’s shareholders each quarter through either stock buybacks or a special dividend or a combination of stock buybacks and a special dividend. The aggregate payment under the Capital Program initially was a minimum of $10.0 million each quarter and was increased to be a minimum of $12.0 million each quarter. Amounts paid under the Capital Program are in addition to the Company’s regular quarterly dividend payments. On August 5, 2015, the Company’s board of directors approved the payment of the Company’s quarterly dividend of $0.34 per common share. The dividend for the third quarter of 2015 will be paid to holders of record on August 21, 2015. This estimated $15.2 million dividend payment is expected to be made on September 11, 2015. A summary of the Company’s quarterly dividends paid since its initial dividend payment is as follows (in thousands, except per share amounts): Dividend Period Amount per Common Share Record Date Payment Date Dividends Paid Q3 2012 $ August 22, 2012 September 12, 2012 $ Q4 2012 $ November 21, 2012 December 12, 2102 $ Q1 2013 $ March 4, 2013 March 15, 2013 $ Q2 2013 $ May 31, 2013 June 18, 2013 $ Q3 2013 $ September 5, 2013 September 25, 2013 $ Q4 2013 $ November 27, 2013 December 20, 2013 $ Q1 2014 $ March 7, 2014 March 27, 2014 $ Q2 2014 $ May 30, 2014 June 18, 2014 $ Q3 2014 $ August 29, 2014 September 19, 2014 $ Q4 2014 $ November 26, 2014 December 12, 2014 $ Q1 2015 $ March 11, 2015 March 26, 2015 $ Q2 2015 $ May 22, 2015 June 12, 2015 $ A summary of the Company’s amounts paid under the Capital Program is as follows (in thousands, except per share amounts): Dividend Period Capital Program Amount Stock Buyback Amount During the Period Stock Buyback Amount Greater than Capital Program Amount? Payment Under Capital Program Paid As Dividend (1) Amount Per Share Paid As Dividends Under the Capital Program Q3 2013 $ $ — No $ — $ — Q4 2013 $ $ — No $ $ Q1 2014 $ $ Yes $ $ Q2 2014 $ $ Yes $ — $ — Q3 2014 $ $ Yes $ — $ — Q4 2014 $ $ No $ — $ — Q1 2015 $ $ No $ $ Q2 2015 $ $ Yes $ $ (1) Under the Capital Program if the amount spent on stock buybacks during a quarter is less than the program amount the difference is added to the dividend payment for the following quarter. The stock buyback amount for the second quarter of 2015 was $19.1 million and more than the Capital Program amount of $12.0 million. As a result no additional amounts will be added to the third quarter 2015 regular dividend. The payment of any future dividends and any other returns of capital will be at the discretion of the Company’s board of directors and may be reduced, eliminated or increased and will be dependent upon the Company’s financial position, results of operations, available cash, cash flow, capital requirements, limitations under the Company’s debt indentures as described in Note 3, and other factors deemed relevant by the Company’s board of directors. The Company is a Delaware Corporation and under the General Corporate Law of the State of Delaware distributions may be restricted including a restriction that distributions, including stock purchases and dividends, do not result in an impairment of a corporation’s capital, as defined under Delaware Law.

Related party transactions_

Related party transactions:	6 Months Ended
	Jun. 30, 2015
Related party transactions:
Related party transactions:	8. Related party transactions: Office lease The Company’s headquarters was located in an office building owned by Niobium LLC (a successor to 6715 Kenilworth Avenue Partnership). The two owners of Niobium LLC are the Company’s Chief Executive Officer, David Schaeffer, who has a 51% interest in Niobium LLC and his wife who has a 49% interest. The lease was scheduled to end on August 31, 2016 and was cancellable by the Company upon 60 days’ notice. The Company terminated the lease effective as of May 10, 2015. In April 2015, the Company entered into a new lease agreement for its headquarters building with Sodium LLC whose two owners are the Company’s Chief Executive Officer, David Schaeffer, who has a 51% interest in Sodium LLC and his wife who has a 49% interest. The Company moved into the new headquarters building in May 2015. The fixed annual rent for the new headquarters building is $1.0 million per year plus an allocation of taxes and utilities. The lease term is for five years and is cancellable by the Company upon 60 days’ notice. The Company’s audit committee reviews and approves all transactions with related parties. The Company paid $0.3 million, $0.4 million, $0.1 million and $0.3 million in the three and six months ended June 30, 2015 and 2014, respectively, for rent and related costs (including taxes and utilities) to these lessors, respectively.

Segment information_

Segment information:	6 Months Ended
	Jun. 30, 2015
Segment information:
Segment information:	9. Segment information: The Company operates as one operating segment. The Company’s service revenue and long lived assets by geographic region are as follows (in thousands): Three Months Ended June 30, 2015 Three Months Ended June 30, 2014 Six Months Ended June 30, 2015 Six Months Ended June 30, 2014 Revenues North America $ $ $ $ Europe Total $ $ $ $ June 30, 2015 December 31, 2014 Long lived assets, net North America $ $ Europe Total $ $ The majority of North American revenue consists of services delivered within the United States.

Description of the business a16

Description of the business and recent developments: (Policies)	6 Months Ended
	Jun. 30, 2015
Description of the business and recent developments:
Basis of presentation	Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments that the Company considers necessary for the fair presentation of its results of operations and cash flows for the interim periods covered, and of the financial position of the Company at the date of the interim condensed consolidated balance sheet. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. While the Company believes that the disclosures are adequate to not make the information misleading, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in its 2014 annual report on Form 10-K. The accompanying unaudited consolidated financial statements include all wholly-owned subsidiaries. All inter-company accounts and activity have been eliminated.
Use of estimates	Use of estimates The preparation of consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.
Financial instruments	Financial instruments At June 30, 2015, the carrying amount of cash and cash equivalents, accounts receivable, prepaid and other current assets, accounts payable and accrued expenses approximated fair value because of the short-term nature of these instruments. The Company measures its cash equivalents at amortized cost, which approximates fair value based upon quoted market prices (Level 1). Based upon recent trading prices (Level 2 — market approach) at June 30, 2015 the fair value of the Company’s $200.0 million senior unsecured notes was $190.8 million and the fair value of the Company’s $250.0 million senior secured notes was $247.5 million. The Company was party to letters of credit totaling $0.4 million as of June 30, 2015. These letters of credit are secured by investments that are restricted and included in other assets.
Basic and diluted net income (loss) per common share	Basic and diluted net income (loss) per common share Basic earnings per share (“EPS”) excludes dilution for common stock equivalents and is computed by dividing net income or (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding during each period, adjusted for the effect of dilutive common stock equivalents. Shares of restricted stock are included in the computation of basic EPS as they vest and are included in diluted EPS, to the extent they are dilutive, determined using the treasury stock method. As of June 30, 2015 and 2014, 1.1 million and 0.8 million unvested shares of restricted common stock, respectively, are not included in the computation of basic income per share, as these shares were not vested. Using the “if-converted” method, the shares issuable upon conversion of the Company’s convertible senior notes (the “Convertible Notes”) were anti-dilutive for the three months ended June 30, 2014. Accordingly, that impact has been excluded from the computation of diluted loss per share. The Convertible Notes were repaid in June 2014 and are no longer outstanding. Anti-dilutive stock options and restricted shares excluded from diluted weighted average shares were 120,553 and 369,243 as of June 30, 2015 and 46,226 and 1,200 as of June 30, 2014, respectively. For the three and six months ended June 30, 2015 and 2014, the Company’s employees exercised options for 6,165, 12,624, 15,278 and 25,035 common shares, respectively. The following details the determination of diluted weighted average shares: Three Months Ended June 30, 2015 Three Months Ended June 30, 2014 Six Months Ended June 30, 2014 Weighted average common shares - basic Dilutive effect of stock options Dilutive effect of restricted stock Weighted average common shares - diluted
Recent accounting pronouncements	Recent Accounting Pronouncements On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company beginning on January 1, 2018. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest — Simplifying the Presentation of Debt Issuance Costs . The ASU will require debt issuance costs to be presented as a deduction from the corresponding debt liability making the presentation of debt costs consistent with the presentation of debt discounts or premiums. The new standard is effective for the Company on January 1, 2016 and the ASU must be applied retrospectively to all prior periods.

Description of the business a17

Description of the business and recent developments: (Tables)	6 Months Ended
	Jun. 30, 2015
Description of the business and recent developments:
Schedule of diluted weighted average shares	Three Months Ended June 30, 2015 Three Months Ended June 30, 2014 Six Months Ended June 30, 2014 Weighted average common shares - basic Dilutive effect of stock options Dilutive effect of restricted stock Weighted average common shares - diluted

Long-term debt_ (Tables)

Long-term debt: (Tables)	6 Months Ended
	Jun. 30, 2015
Long-term debt:
Schedule of interest expense recognized and the effective interest rates for the Convertible Notes	The amount of interest expense recognized and effective interest rates for the Convertible Notes were as follows (in thousands): Three Months Ended June 30, 2014 Six Months Ended June 30, 2014 Contractual coupon interest $ $ Amortization of discount and costs on Notes Interest expense $ $ Effective interest rate % %

Income taxes_ (Tables)

Income taxes: (Tables)	6 Months Ended
	Jun. 30, 2015
Income taxes:
Schedule of components of income (loss) before income taxes	The components of income (loss) before income taxes consist of the following (in thousands): Three Months Ended June 30, 2015 Three Months Ended June 30, 2014 Six Months Ended June 30, 2015 Six Months Ended June 30, 2014 Domestic $ $ $ $ Foreign ) ) ) ) Total $ $ $ $

Dividends on common stock_ (Tab

Dividends on common stock: (Tables)	6 Months Ended
	Jun. 30, 2015
Dividends on common stock:
Summary of the Company's quarterly dividends since the initial dividend payment	A summary of the Company’s quarterly dividends paid since its initial dividend payment is as follows (in thousands, except per share amounts): Dividend Period Amount per Common Share Record Date Payment Date Dividends Paid Q3 2012 $ August 22, 2012 September 12, 2012 $ Q4 2012 $ November 21, 2012 December 12, 2102 $ Q1 2013 $ March 4, 2013 March 15, 2013 $ Q2 2013 $ May 31, 2013 June 18, 2013 $ Q3 2013 $ September 5, 2013 September 25, 2013 $ Q4 2013 $ November 27, 2013 December 20, 2013 $ Q1 2014 $ March 7, 2014 March 27, 2014 $ Q2 2014 $ May 30, 2014 June 18, 2014 $ Q3 2014 $ August 29, 2014 September 19, 2014 $ Q4 2014 $ November 26, 2014 December 12, 2014 $ Q1 2015 $ March 11, 2015 March 26, 2015 $ Q2 2015 $ May 22, 2015 June 12, 2015 $
Summary of the Company's amounts paid under the Capital Program	A summary of the Company’s amounts paid under the Capital Program is as follows (in thousands, except per share amounts): Dividend Period Capital Program Amount Stock Buyback Amount During the Period Stock Buyback Amount Greater than Capital Program Amount? Payment Under Capital Program Paid As Dividend (1) Amount Per Share Paid As Dividends Under the Capital Program Q3 2013 $ $ — No $ — $ — Q4 2013 $ $ — No $ $ Q1 2014 $ $ Yes $ $ Q2 2014 $ $ Yes $ — $ — Q3 2014 $ $ Yes $ — $ — Q4 2014 $ $ No $ — $ — Q1 2015 $ $ No $ $ Q2 2015 $ $ Yes $ $ (1) Under the Capital Program if the amount spent on stock buybacks during a quarter is less than the program amount the difference is added to the dividend payment for the following quarter. The stock buyback amount for the second quarter of 2015 was $19.1 million and more than the Capital Program amount of $12.0 million. As a result no additional amounts will be added to the third quarter 2015 regular dividend.

Segment information_ (Tables)

Segment information: (Tables)	6 Months Ended
	Jun. 30, 2015
Segment information:
Schedule of service revenues and long lived assets by geographic region	The Company’s service revenue and long lived assets by geographic region are as follows (in thousands): Three Months Ended June 30, 2015 Three Months Ended June 30, 2014 Six Months Ended June 30, 2015 Six Months Ended June 30, 2014 Revenues North America $ $ $ $ Europe Total $ $ $ $ June 30, 2015 December 31, 2014 Long lived assets, net North America $ $ Europe Total $ $

Description of the business a22

Description of the business and recent developments: (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2015USD ($)MB	Dec. 31, 2014USD ($)
Financial instruments
Senior unsecured notes	$ 200,000	$ 200,000
Senior secured notes	250,000
Letters of credit, outstanding amount	$ 400
Minimum
On-net service - high-speed Internet access and IP connectivity
Speed per second of bandwidth (in megabits) | MB	100
Maximum
On-net service - high-speed Internet access and IP connectivity
Speed per second of bandwidth (in megabits) | MB	10,240
Senior unsecured notes
Financial instruments
Senior unsecured notes	$ 200,000
Senior unsecured notes | Level 2
Financial instruments
Debt instrument, fair value amount	190,800
Senior secured notes
Financial instruments
Senior secured notes	250,000
Senior secured notes | Level 2
Financial instruments
Debt instrument, fair value amount	$ 247,500

Description of the business a23

Description of the business and recent developments: (Details 2) - shares	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Restricted stock
Basic and diluted net (loss) income per common share
Restricted common stock not included in computation of basic income per share as shares were not vested (in shares)	1,100,000	800,000
Anti-dilutive shares excluded from diluted weighted average shares	369,243	1,200
Stock options
Basic and diluted net (loss) income per common share
Anti-dilutive shares excluded from diluted weighted average shares	120,553	46,226

Description of the business a24

Description of the business and recent developments: (Details 3) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Diluted weighted average shares
Weighted average common shares-basic	44,774,831	45,897,449	45,012,441	46,200,844
Weighted average common shares-diluted	45,054,507	46,294,966	45,012,441	46,648,415
Stock options
Basic and diluted net income (loss) per common share
Options exercised during the period (in shares)	6,165	15,278	12,624	25,035
Diluted weighted average shares
Dilutive effect of awards (in shares)	42,749	59,270		68,504
Restricted stock
Diluted weighted average shares
Dilutive effect of awards (in shares)	236,927	338,247		379,067

Property and equipment_ (Detail

Property and equipment: (Details) $ in Thousands	1 Months Ended		3 Months Ended		6 Months Ended
	Mar. 31, 2015USD ($)	Jan. 31, 2015USD ($)	Jun. 30, 2015USD ($)	Jun. 30, 2014USD ($)	Jun. 30, 2015USD ($)payment	Jun. 30, 2014USD ($)	Dec. 31, 2014USD ($)
Property and equipment
Depreciation and amortization expense			$ 17,371	$ 17,301	$ 34,883	$ 34,505
Capitalized salaries and related benefits of employees			2,100	1,900	4,300	3,900
Gains from asset related transactions					4,594	4,900
Gain on capital lease termination
Net book value			347,550		347,550		$ 360,761
Gain on capital lease termination					10,110
Vendor in Spain
Gain on capital lease termination
Estimated termination liability of IRU capital leases	$ 8,100
Carrying value of lease liabilities	29,900
Gain on capital lease termination	$ 10,100
Property, equipment and capital leases
Property and equipment
Depreciation and amortization expense			17,400	17,300	34,800	34,500
Network equipment
Property and equipment
Gains from asset related transactions			700	2,700	2,300	4,900
Equipment purchase agreement
Purchase agreement		$ 28,900
Term of purchase agreement		18 months
Required purchases remaining under purchase agreement			19,500		$ 19,500
Network equipment | Note obligations
Property and equipment
Number of payments during the first six months | payment					0
Number of equal payments | payment					18
Remaining term					18 months
Installment payment agreement
Amount of installment payment agreement			25,000		$ 25,000
Term of debt	24 months
Aggregate principal amount of debt issued			5,600		5,600
Unamortized discount			300		300
Network equipment | Level 3
Property and equipment
Fair market value of equipment received in exchange			$ 1,700	$ 5,600	$ 8,300	$ 10,300
Indefeasible rights of use (IRUs) | Vendor in Spain
Gain on capital lease termination
Net book value	$ 10,000

Long-term debt_ (Details)

Long-term debt: (Details) $ in Thousands

Mar. 12, 2015USD ($)

Jun. 20, 2014USD ($)

Jun. 16, 2014USD ($)

Apr. 09, 2014USD ($)

Aug. 19, 2013USD ($)

Jan. 26, 2011USD ($)

Mar. 31, 2015USD ($)

Feb. 28, 2015USD ($)

Jun. 30, 2007USD ($)

Jun. 30, 2014USD ($)

Jun. 30, 2015USD ($)

Jun. 30, 2015USD ($)

Jun. 30, 2014USD ($)

Dec. 31, 2013

Dec. 31, 2008USD ($)

Dec. 31, 2014USD ($)

Long-term debt

Amount of debt redeemed

$ 251,280

Loss on debt extinguishment and redemption

10,144

Net proceeds from issuance of senior secured notes

248,599

Senior secured notes, premium (in dollars)

$ 4,230

Purchase of convertible notes in cash

$ 91,978

Convertible senior notes

Long-term debt

Interest rate (as a percent)

1.00%

Aggregate principal amount notes issued

$ 200,000

Aggregate face value of debt repurchased

$ 108,000

Proceeds from issuance of long-term debt, net of issuance costs

$ 195,100

Percentage of original issuance discount

2.25%

Purchase of convertible notes in cash

$ 33,500

$ 58,500

48,600

Debt and equity components for the Convertible Notes

Net carrying amount

$ 92,000

Amount of interest expense recognized and effective interest rate

Contractual coupon interest

$ 189

419

Amortization of discount and costs on Notes

1,417

3,106

Interest expense

$ 1,606

$ 3,525

Effective interest rate (as a percent)

8.70%

8.70%

Convertible senior notes | June 15, 2014, 2017 and 2022

Long-term debt

Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase

100.00%

Convertible senior notes | After June 20, 2014

Long-term debt

Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase

100.00%

Senior Secured Notes 2018

Long-term debt

Amount of debt redeemed

$ 240,000

Interest rate (as a percent)

8.375%

8.375%

8.375%

Aggregate principal amount notes issued

$ 65,000

$ 175,000

Amount deposited with the trustee for the benefit of the holders

$ 251,600

Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase

104.188%

Aggregate face value of debt repurchased

$ 240,000

Loss on debt extinguishment and redemption

$ 10,100

Proceeds from issuance of long-term debt, net of issuance costs

69,900

170,500

Debt issuance costs

$ 1,000

$ 4,500

Premium price of debt instrument (as a percent)

109.00%

Senior secured notes, premium (in dollars)

$ 5,900

Senior Secured Notes 2022

Long-term debt

Interest rate (as a percent)

5.375%

5.375%

5.375%

Aggregate principal amount notes issued

$ 250,000

$ 250,000

Net proceeds from issuance of senior secured notes

$ 248,600

Percentage of equity interest in foreign entities used as collateral

65.00%

Period prior to maturity date may be redeemed at specified price

3 months

Permitted investments and payments

$ 87,500

Senior Secured Notes 2022 | Minimum

Long-term debt

Consolidated leverage ratio to restrict on incurring additional indebtedness

5

Senior Secured Notes 2022 | Maximum

Long-term debt

Consolidated leverage ratio to be maintained to increase amount of permitted investments and payments by consolidated cash flow

4.25

Senior Secured Notes 2022 | Prior to December 1, 2021

Long-term debt

Percentage of redemption price of principal amount accrued interest

100.00%

Senior Secured Notes 2022 | On or after December 1, 2021

Long-term debt

Percentage of redemption price of principal amount accrued interest

100.00%

Senior Secured Notes 2022 | Subsidiaries

Long-term debt

Permitted investments and payments

$ 56,700

Senior Secured Notes 2022 | Holdings

Long-term debt

Permitted investments and payments

$ 30,800

Senior Unsecured Notes 2021

Long-term debt

Permitted investments and payments

$ 87,500

Percentage of principal amount at which notes will be required to be repurchased in the event of a change of control

101.00%

Senior Unsecured Notes 2021 | Treasury Rate

Long-term debt

Discount rate used to compute make-whole premium, basis points added to reference rate (as a percent)

0.50%

Senior Unsecured Notes 2021 | Minimum

Long-term debt

Consolidated leverage ratio to restrict on incurring additional indebtedness

5

Senior Unsecured Notes 2021 | Maximum

Long-term debt

Consolidated leverage ratio to be maintained to increase amount of permitted investments and payments by consolidated cash flow

4.25

Senior Unsecured Notes 2021 | Prior to April 15, 2017

Long-term debt

Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase

104.219%

Percentage of redemption price of principal amount accrued interest

100.00%

Percentage of outstanding principal amount used in calculation of make-whole premium

1.00%

Maximum percentage of principal amount of debt instrument which the entity could redeem with proceeds from certain equity offerings

35.00%

Percentage of redemption price which may redeem with net cash proceeds from certain equity offerings

105.625%

Senior Unsecured Notes 2021 | 12-month period beginning on April 15, 2017

Long-term debt

Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase

104.219%

Senior Unsecured Notes 2021 | 12-month period beginning on April 15, 2018

Long-term debt

Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase

102.813%

Senior Unsecured Notes 2021 | 12-month period beginning on April 15, 2019

Long-term debt

Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase

101.406%

Senior Unsecured Notes 2021 | 12-month period beginning on April 15, 2020 and thereafter

Long-term debt

Percentage of principal amount that the holders of the Convertible Notes may require the Company to repurchase

100.00%

Senior Unsecured Notes 2021 | Subsidiaries

Long-term debt

Permitted investments and payments

$ 56,700

Senior Unsecured Notes 2021 | Holdings

Long-term debt

Permitted investments and payments

$ 30,800

Senior Unsecured Notes 2021 | Cogent Finance

Long-term debt

Interest rate (as a percent)

5.625%

Aggregate principal amount notes issued

$ 200,000

Proceeds from issuance of long-term debt, net of issuance costs

$ 195,800

Commitments and contingencies_

Commitments and contingencies: (Details) - Jun. 30, 2015 $ in Millions	USD ($)employee
Former Sales Employees Fair Labor Standards Act
Commitments and contingencies
Number of employees who opted to file an action | employee	70
Leased circuit and dark fiber costs | Maximum
Commitments and contingencies
Estimate of possible loss in excess of the amount accrued	$ 2.3

Income taxes_ (Details)

Income taxes: (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income taxes:
Federal income tax at statutory rates (as a percent)	35.00%	35.00%	35.00%	35.00%
Components of (loss) income before income taxes
Domestic	$ 6,078	$ 7,578	$ 903	$ 16,014
Foreign	(4,543)	(6,791)	(89)	(13,486)
Income before income taxes	$ 1,535	$ 787	$ 814	$ 2,528

Common stock buyback programs_

Common stock buyback programs: (Details) - USD ($) $ in Thousands, shares in Millions	3 Months Ended						6 Months Ended
	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Jun. 30, 2015	Jun. 30, 2014	Aug. 05, 2015
Common stock buyback program:
Additional amount authorized under Buyback Program									$ 50,000
Remaining authorized amount of common stock repurchases under the Buyback Program	$ 10,000						$ 10,000
Repurchase of common stock (in shares)	0.6				0.5		0.8	0.9
Cost of shares of common stock repurchase under buyback program	$ 19,106	$ 8,119	$ 10,555	$ 15,943	$ 17,888	$ 14,196	$ 27,200	$ 32,100

Dividends on common stock_ (Det

Dividends on common stock: (Details) $ / shares in Units, $ in Thousands	Sep. 11, 2015USD ($)	Aug. 05, 2015$ / item	Jun. 12, 2015USD ($)	Mar. 26, 2015USD ($)	Dec. 12, 2014USD ($)	Sep. 19, 2014USD ($)	Jun. 18, 2014USD ($)	Mar. 27, 2014USD ($)	Dec. 20, 2013USD ($)	Sep. 25, 2013USD ($)	Jun. 18, 2013USD ($)	Mar. 15, 2013USD ($)	Dec. 12, 2012USD ($)	Sep. 12, 2012USD ($)	Jun. 30, 2015USD ($)$ / shares	Mar. 31, 2015USD ($)$ / shares	Dec. 31, 2014USD ($)$ / shares	Sep. 30, 2014USD ($)$ / shares	Jun. 30, 2014USD ($)$ / shares	Mar. 31, 2014USD ($)$ / shares	Dec. 31, 2013USD ($)$ / shares	Sep. 30, 2013USD ($)$ / shares	Jun. 30, 2013$ / shares	Mar. 31, 2013$ / shares	Dec. 31, 2012$ / shares	Sep. 30, 2012$ / shares	Jun. 30, 2015USD ($)$ / shares	Jun. 30, 2014USD ($)$ / shares
Dividends on common stock
Capital Program Amount															$ 12,000	$ 12,000	$ 12,000	$ 12,000	$ 10,500	$ 10,500	$ 10,500	$ 10,000					$ 12,000	$ 10,500
Dividends declared per common share (in dollars per share) | $ / shares															$ 0.42	$ 0.35	$ 0.31	$ 0.30	$ 0.17	$ 0.39	$ 0.37	$ 0.14	$ 0.13	$ 0.12	$ 0.11	$ 0.10	$ 0.77	$ 0.56
Regular quarterly dividend (in dollars per share) | $ / item		0.34
Stock Buyback Amount During the Period															$ 19,106	$ 8,119	$ 10,555	$ 15,943	$ 17,888	$ 14,196							$ 27,200	$ 32,100
Dividends paid			$ 18,972	$ 16,001	$ 14,190	$ 13,792	$ 7,882	$ 18,352	$ 17,206	$ 6,512	$ 6,145	$ 5,489	$ 5,012	$ 4,537													$ 34,973	$ 26,234
Payment Under Capital Program Paid As Dividend															$ 4,019	$ 1,357				$ 10,707	$ 10,186
Amount Per Share Paid As Dividends Under the Capital Program | $ / shares															$ 0.09	$ 0.03				$ 0.23	$ 0.22
Expected
Dividends on common stock
Expected value of dividend to be paid	$ 15,200
Minimum
Dividends on common stock
Capital Program Amount									$ 10,000												$ 12,000

Related party transactions_ (De

Related party transactions: (Details) $ in Millions	1 Months Ended	3 Months Ended		4 Months Ended	6 Months Ended
	Apr. 30, 2015USD ($)item	Jun. 30, 2015USD ($)	Jun. 30, 2014USD ($)	May. 10, 2015item	Jun. 30, 2015USD ($)	Jun. 30, 2014USD ($)
Office lease
Payment for rent and related costs (in dollars)		$ 0.3	$ 0.1		$ 0.4	$ 0.3
Niobium LLC
Office lease
Number of owners of the LLC | item				2
Niobium LLC | Lease
Office lease
Notice period for cancellation of lease				60 days
Sodium LLC
Office lease
Number of owners of the LLC | item	2
Sodium LLC | Lease
Office lease
Notice period for cancellation of lease	60 days
Fixed annual rent	$ 1
Lease term (in years)	5 years
Chief Executive Officer | Niobium LLC
Office lease
Ownership interest of related parties held in the partnership (as a percent)				51.00%
Chief Executive Officer | Sodium LLC
Office lease
Ownership interest of related parties held in the partnership (as a percent)	51.00%
Chief Executive Officer's wife | Niobium LLC
Office lease
Ownership interest of related parties held in the partnership (as a percent)				49.00%
Chief Executive Officer's wife | Sodium LLC
Office lease
Ownership interest of related parties held in the partnership (as a percent)	49.00%

Segment information_ (Details)

Segment information: (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015USD ($)	Jun. 30, 2014USD ($)	Jun. 30, 2015USD ($)segment	Jun. 30, 2014USD ($)	Dec. 31, 2014USD ($)
Segment information
Number of operating segments | segment			1
Revenues	$ 98,799	$ 94,623	$ 196,041	$ 187,560
Long lived assets, net	347,580		347,580		$ 360,795
North America
Segment information
Revenues	81,194	74,567	160,831	147,610
Long lived assets, net	272,008		272,008		266,713
Europe
Segment information
Revenues	17,605	$ 20,056	35,210	$ 39,950
Long lived assets, net	$ 75,572		$ 75,572		$ 94,082